Here's something I think all Fools should be aware of, and maybe something WE, here on TMFool, should take seriously. I listen to NPR news in the mornings and this mornings broadcast was most interesting; an interview with the former SEC chairman, Arthur Levitt.

Host Bob Edwards talks with former SEC Chairman Arthur Levitt. Levitt responds to a Senate committee report this week that claims the commission, during his tenure, was riddled with "failure," especially in its handling of Enron's annual financial reports. The former chairman also talks about his vision to educate small investors about the realities of Wall Street. That vision is outlined in a new book, Take on the Street: What Wall Street and Corporate America Don't Want You to Know. (6:21)

Following is my partial transcript of the interview; the questions and answers which I thought were the most revealing.Arthur Levitt; Only when I became part of the process, when I got into the inner circle, and there is clearly an inner circle, that nobody outside of the beltway can possibly understand; did I realize that was going on was a blood sport. You were venal and evil; and the stakes were very different.

Bob Edwards; what reforms did you propose, and what happened to those reforms?

Arthur Levitt; Well, the initial reform that really got everybody's blood boiling; was when the commission brought an anti-trust action for collusive practices by the over-the-counter market makers. As I mention in my book; the Congress came down on me like a blanket, threatening me, that if I go ahead and do this their local firms are going to be hurt, but we went ahead and did it, we brought that action jointly with the Justice Dept. and the result of that was lowering spreads so that investors rec'd the transfer of billions of dollars ayear from the pockets of brokers. and then we went on to other initiatives that were the object of lobbyists complaints, and the time spent responding to congressional harassments was enormous, I testified on average once every three weeks, and that involved days of preparation, always to defend particular action.

Bob Edwards; You have in back of the book; letter from members of Congress to you, uh, asking questions about your proposed reforms, questions you believe were written by the very lobbyists that were opposing those reforms.

Arthur Levitt; I know that to be the case from Ken Lay, saying to me; "Arthur, look; we depend on Arthur Andersen, and your notion of getting them to separate consulting services from auditing services, really would hurt us."

Bob Edwards; Ken Lay was the chairman of Enron, and you write in the book, uh; it was as if everything I feared might happen, did happen, within one company.

Arthur Levitt; Yes, it really did we, uh, had been looking for a smoking gun during the months that we tried to separate auditing and consulting services, and we knew that we had cases against just about every one of the big five firms.

In the final analysis, we had to settle for half a loaf, we were not able to totally separate auditing and consulting, and it was only after I left Washington, that the Anderson/Enron episode occurred, and people asked me whether I feel vindicated; I really feel saddened, because the power of lobbyist in Washington is SO enormous... and the potential power of what could be the strongest lobbying group in the nation, uh, the individual investor; is totally impotent! The book was really written as a means of trying to galvanize investors into forming groups that will represent their interests, and at least to understand what has been happening to them by these other very influential groups.

Bob Edwards; What about your goal of empowering individual investors; is that practical, can you make that happen?

Arthur Levitt; I can't make it happen; I can try to nudge it along, I'm going to keep pushing this because, I think, that the reason that our markets are the strongest in the world is because of investor confidence. It's going to take us months to restore that.

Bob Edwards; Former SEC Chairman; Arthur Leavitt. His new book, Take on the Street: What Wall Street and Corporate America Don't Want You to Know.Listen to the entire interview at the following link.

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